The government has been quick to shut down any demonstrations, and has publicly reminded workers in the oil industry that they have always been well taken care of. But raises to public employees have been uneven, and those who did not get the highest increases are unhappy. Thousands of local defense guards (largely part-time watchmen originally organized in the 1990s to deal with widespread Islamic terrorism) are demonstrating for a raise. Most of the 94,000 guards have jobs, in areas of high unemployment, that are no longer needed. But they want a retroactive raise, and at least 10,000 got into the capital and in front of the parliament building. Meanwhile, the government has announced huge (over $200 billion) investment plans for the rest of the decade, to build infrastructure and support job growth. But such promises have been made before, and somehow never panned out. This time, the charm offensive is more sustained and extensive. Local officials have been ordered to try harder, a lot harder, to do something for the poor and unemployed who come to them for aid. Thus the sudden surge of reports from all over the country about how cranky officials have suddenly taken happy pills and undergone amazing transformations. Meanwhile, the security forces continue to search for al Qaeda, at least along the coastal areas. But there are fewer Islamic radicals to find. Most of the hard-core have gone south, to join the al Qaeda organization in West Africa, that is getting rich by providing security for moving cocaine shipments north, as well as from kidnapping and anything else that will produce a big payday.
As for the rebellions sweeping the Arab world, Algeria has an advantage over other Arab dictatorships, in that Algeria has just come off a long (over a decade) and successful battle with Islamic militants. Then there is the always restive Berber minority, which mainly demonstrates a lot, and vigorously. Thus the government has a large, well trained, experienced and highly paid security force for all this. Any potential rebel movements have some very professional and experienced opposition.
Thousands of additional troops and police have been sent to the Libyan border, to provide security among the hundreds of thousands of refugees there, or expected to arrive. There are few pro-Kaddafi border guards there, although that can change from day to day. The Algerian government remains, quietly, an ally of Kaddafi. Military dictators tend to stick together. Kaddafi also has friends in Syria, another decades old Arab dictatorship.
Next door, a war is being fought along the coastal highway. On the west end of the country, dictator Muamar Kaddafi controls most of the capital, Tripoli, along with its many military bases. On the east end, there is Benghazi, in the hands of rebels. In the middle (closer to Benghazi) is the oil shipping facility at Ras Lanuf. Control the oil and you control the national wealth. Kaddafi's forces control the city of Sirte (Kaddafi's home town), just to the west of Ras Lanuf (which is 620 kilometers from Tripoli). Rebels and Kaddafi forces are contesting Zawiya (the only large town between Tripoli and the Tunisian border) and Tobruk (the only major city between Benghazi and the Egyptian border). The rebels have more armed men, but most are civilian volunteers, armed with assault rifles and not much else. There is not much training or discipline, and little experienced military leadership. The government has some warplanes and armed helicopters, as well as some tanks and artillery. The government forces also have some civilian volunteers and a growing number of foreign mercenaries (from Tuareg tribes to the south, as well as Eastern Europe and Syria). The government forces also have better discipline. Many senior men from the security forces and the military have remained with Kadaffi, for the moment.
No foreign government has openly given military aid to the rebels, but cargo ships are arriving in Benghazi with food and other supplies, which can also be used by the rebel fighters. Meanwhile, there's growing evidence that Arab and NATO nations are quietly slipping in special operations troops and essential supplies (special radios and such). Government forces are causing thousands, tens of thousands, of casualties, which medical facilities are overwhelmed with. The pro-Kaddafi forces apparently have order to fire on any resistance, armed or unarmed. The situation is ugly, much worse than most media reports describe it.
The government is also using its better connections (via long time control of all mass media) to get out a growing number of false claims about the success of their fighting forces. The pro-Kaddafi columns can roll down the highway and into a rebel held city, fight for a few hours, issue press releases claiming victory, and then withdraw because of the numerous, and persistent, rebel gunmen. The Kaddafi forces can roll through, or push back, the rebels, but not exterminate them. That will require sustained attacks on the civilian population, which even many Kaddafi supporters are reluctant to undertake. Foreign mercenaries, however, are less restrained in the mass murder department.
Kaddafi has been reported to have made several attempts at diplomacy with the rebels, but so far, no one has been willing to talk terms with the dictator. Western and Arab nations are concerned about Libya sliding into perpetual war and chaos, much like Somalia. No one wants to send in troops, because it would be expensive, and politically embarrassing if you were one of the many countries that condemned the U.S. invasion of Iraq and overthrow of dictator Saddam Hussein. Efforts are being made to spin the situation in the media, to make military aid acceptable, but this takes time. Meanwhile, the Libyan rebels are not united at all, with numerous factions. There's really no one for foreign nations to negotiate or coordinate with.
March 7, 2011: NATO began sending its AWACS aircraft to monitor aircraft activity over northern Libya. The AWACS can fly over international waters and still monitor air activity several hundred kilometers into Libya. Several nations are also using their spy satellites to monitor what's going on down there, and some of that information is probably making its way to the rebels.
March 4, 2011: A large weapons and munitions storage base outside Benghazi blew up, killing at least twenty and destroying large quantities of military material. Rebels blamed pro-Kaddafi agents, but it could have been due to untrained rebels mishandling weapons or munitions.
March 3, 2011: The ICC (International Criminal Court) has launched an investigation into the crimes of the Kaddafi clan (the father and his three sons), as well as senior government officials. This makes it easier to restrict the international movement of Kaddafi, his close associates, and the billions of dollars they have in overseas banks.
March 2, 2011: Libyan diplomats and agents have been seen recruiting Tuareg tribesmen in Niger, Mali, Algeria and Burkina Faso, to fight in Libya to keep Kaddafi in power. Kaddafi has been hiring Tuareg to fight for him for decades, so there is a willingness of young Tuareg to take the money ($10,000 to sign up and several thousand a week thereafter) to risk their lives for a desperate dictator. Apparently Kaddafi has the cash and trucks to recruit and transport several thousand of these Tuareg mercenaries.